Retirement and Pensions Auto-enrolment

Guidance for retiring employees – information about Retirement and Pensions, updated April 2017.

The statutory default retirement age (DRA) of 65 years was removed in 2011, meaning that Employers cannot automatically end an employees employment when they reach that age anymore (in most circumstances). Here we look at what’s happened since the law changed… updated 2016:

So what does this actually mean?

Workers can now carry on working past age 65 if they want to. However, this change in the law doesn’t affect the fact that employees can still choose to voluntarily retire at age 65 if they wish.


Now, Employers who wish to end a worker’s employment will either have to:

  • Follow a fair procedure under normal fair dismissal rules, e.g. a dismissal for conduct or capability (treated like any other employee), otherwise they could face an unfair dismissal claim and an age discrimination claim from the employee, or
  • Keep their own compulsory retirement age for all employees called an EJRA (Employer Justified Retirement Age) but be able to justify this. Such dismissals would be on the grounds of ‘some other substantial reason’ and would also need to follow a fair procedure* – giving the employee adequate notice of impending retirement, allowing them to make representations before a decision is made, which includes considering any requests for them to stay on beyond the compulsory retirement age, allowing a right to appeal.
  • It is not clear whether the ACAS Code of Practice on Disciplinary and Grievance procedures applies to EJRA’s or dismissals for ‘some other substantial reason’ (SOSR). A recent tribunal case, Cummins v Siemens Communications Ltd said the code did apply to SOSR dismissals but this decision is not binding on other tribunals.

Retirement and Pensions

Your Contracts and Handbooks must be amended to reflect this new position.

If an employer wishes to keep their own compulsory retirement age they must be able to justify that it is a proportionate means of achieving a legitimate business aim.

An aim can be ‘legitimate’ if it is related to:

  • Economic factors, such as the needs of running a business (e.g. workforce planning – the need for the business to recruit, retain and provide promotion opportunities and effectively manage successions)
  • The health, welfare and safety of the individual to be retired, their colleagues and the public
  • The particular training requirements of the job.
  • ‘Proportionate’ could mean (demonstrating that the compulsory retirement age as a proportionate means of achieving that aim):
  • What the employer is actually doing to achieve its aim
  • The discriminatory effect would be significantly outweighed by the importance and benefits of the aim and
  • The employer should have no reasonable alternative to the action they are taking.

Therefore the employer would need to provide evidence of all of this – that they have ‘objective’ justification for the retirement age. Employers can start by setting out the reasons it needs the retirement age; consider whether they have good evidence to support this; then consider if there is an alternative or less or non-age discriminatory way of achieving the same result.


Under the new Act, a person is disabled if they have a physical or mental impairment which has a substantial and long-term adverse effect on their ability to carry out normal day-to-day activities (which would include things like using a telephone, reading a book or using public transport).

‘Normal day to day activity’ was, in 2016, found by the Employment Appeal Tribunal to also include many skills and activities commonly required for work (you can read more details in our additional disability article given above).

As before, the Act puts a duty on employers to make reasonable adjustments for staff to help them overcome disadvantage resulting from an impairment. Disabled people are no longer required themselves to establish that their treatment is less favourable than that experienced by a non-disabled employee. –

Retirement and Pensions – So what’s happened since the introduction of this? There have been a few high profile employment tribunal cases so far.

In a 2012 case for age discrimination bought when a firm retired an employee at age 65, the UK Supreme Court said that an employer could have their own DRA. The Supreme Court said that:

  • ‘Succession planning’ (allowing opportunities for promotion and retention of younger staff where there is real business need for this) and
  • Avoiding the performance management dismissals of older workers (who were underperforming – referred to as ‘dignity’ by maintaining a congenial and supportive workplace)

are legitimate aims to allow an EJRA (backing up earlier ECJ decisions).

So, what age is a proportionate age to pick? Most employers will find it safer at the moment not to have a compulsory retirement age as it can clearly be difficult to show why it is necessary in their business, in relation to their aims.

Where a company carries out a lot of different functions they would find it difficult to have a standard retirement age – but they may be able to have a standard retirement age based on job categories (although of course this doesn’t take into account an employee’s individual fitness and health levels!).

From now on, employers basically need to plan with each employee their individual retirement age – with workers retiring at different ages depending on their capabilities and the job’s requirements.

It is not unlawful for employers to ask employees about their retirement plans (for example for the purpose of planning their future workforce requirements), but employers should be wary of the risk of age discrimination by, for example, putting pressure on the employee to retire. Employers can do this by not expressly asking employees what their retirement plans are, but ask them about their future aims and aspirations – ideally as part of a regular appraisal discussion (that applies to all workers).

The Government has recently indicated that it intends to review its decision to end the DRA in 2016, so we may have another change in the future.


If you would like some help in managing your staffs’ retirement and pensions please contact us using the form below!


Retirement and Pensions – Pensions Auto-Enrolment – the full details

From October 2012 most workers will start being auto-enrolled into a pension plan by their Employer (under the Pensions Bill that also abolished the Default Retirement Age during 2011) – here we give you the full details of the Scheme (as they stand in 2018):

Employers will have to start paying up to a minimum of 3% of each worker‘s monthly salary, starting from October 2012 into a pension scheme and manage their workers’ contributions and the pension fund, if the worker is not already in a suitable pension scheme.

  • However, there is a ‘phasing’ stage for Employer contributions – eventually Employers must make a minimum contribution of 3%, but can pay more, and workers make their own contributions with a minimum of 5% (they will get tax relief on their contributions) – combined, these contributions should be a minimum of 8% of the workers earnings. Initially, however, Employers who have a staging date up to 5th April 2018 (see below) must make a 1% minimum contribution (and the worker a minimum of 1%).
  • From 6th April 2018 Employers must make a 2% minimum contribution (and the worker a minimum of 3%). From 6th April 2019 onwards the Employer minimum will be 3% and the worker minimum must be 5% (so 8% total).
  • The start date for the scheme will be staggered by business size and the applicable start dates (called the ‘staging’ dates) are below. The 1st April 2012 is a crucial date though, as the number of PAYE staff that are employed by an Employer at that date, determines that ‘staging’ date the Employer has to start offering the scheme.

This will apply to all workers aged 22 and over (but who have not yet reached the State Pension age) who earn more than £10,000 per year and who work in the UK. This figure, known as the ‘qualifying figure’ (which is the 2014/15 PAYE threshold but remains the same during through to 2018/19) will be reviewed annually in April and is made up a worker’s pay, overtime, commission, bonuses, statutory sick pay and statutory maternity/paternity/adoption pay. These workers will be called ‘eligible job holders‘ under this legislation and must be auto-enrolled in the pensions scheme.

Workers aged between 16 and 22, and those aged between State Pension Age and 75, and those who are earning more than £6,032 (the 2018/1 Lower Earnings Limit) may join if they choose and will receive Employers contributions. These workers are called ‘non eligible job holders‘ under this legislation but have no right to be auto-enrolled; they must choose to join.

Those workers earning between under £6,032 (from 6th April 2018) can also choose to join the scheme, but may not be eligible for Employer contributions.  . These workers are called ‘entitled’ job holders and Employers do not have to make contributions for these workers; these workers do not have to join the scheme you have chosen for automatic pension enrolment, it can be any scheme you offer they can join.

The upper limit of the qualifying earnings band is £46,350 (from 6th April 2018) – so Employers will only need to make contributions from the Lower Earnings Limit Level to the upper limit.

This includes agency workers.


Eligible jobholders will have to be enrolled automatically by the 12th week of their employment but can choose to opt-back out of the scheme after auto-enrolment.

Employers must communicate to their workers, in writing, when their scheme is starting and how the workers are affected by this. The Employer must tell them they have been automatically enrolled and also that they have the right to Opt Out if they want to do so. From 1st April 2014, Employers have 6 weeks to provide information to workers on their joining and opting out rights.

To Opt Out of the pension scheme a worker must complete an ‘opt-out’ notice within the first month of being auto-enrolled – and will receive a refund of contributions made. A Worker can leave the scheme at any other time if they do not Opt Out, but will not receive a refund of contributions.

Every 3 years all those who have Opted Out will need to be re-enrolled in the scheme (but again can choose to Opt Out).

The Pensions Regulator will contact all Employers 6-12 months before their staging date with full details. Employers must register with The Regulator and give them details of their scheme and the number of people that have been automatically enrolled.

If an Employer does not offer their own pension scheme they will need to choose one

– The Pensions Regulator have produced information to help with this – you can read it here “A quick guide to selecting a good quality pension scheme for automatic enrolment” and The Pension Charges Calculator here ) or they can use the new National Employment Savings Trust (Nest) scheme.

If an Employer already has their own pension scheme they will need to check it is a qualifying scheme and confirm this with the Regulator– a qualifying scheme must not impose barriers, such as probationary periods or age limits for members; or must not require staff to make an active choice to join.

In addition, from 2012, Employers must not:

  • Encourage workers to opt out of the pension scheme (e.g. by using inducements to encourage a worker to Opt out – a salary increase or one-off payment in return for a worker opting out)
  • Have recruitment practices in place that benefit job applicants who indicate they are prepared to opt out, or screen out applicants who wish to join the pension (e.g. the Employer must not ask questions or make statements that state or imply that a job applicant’s success is dependant on whether or not they would opt out of the pension scheme; or for example include an Opt Out form as part of a general application pack).
  • The Pensions Regulator will be responsible for any breaches by an Employer in the above two circumstances.
  • Treat a worker unfairly or put them at a disadvantage or dismiss them because of automatic enrolment (there will be no time limit needed by employees to claim unfair dismissal in these circumstances).
  • Employees will also be able to ‘whistle-blow’ if the feel they have been subject to detriment or dismissal for making a protected disclosure under whistle-blowing legislation, if their employer fails to comply with the auto-enrolment legislation.


Staging date timeline

List of staging dates by PAYE scheme size:

120,000 or more PAYE workers – 1 October 2012
50,000-119,999 – 1 November 2012
30,000-49,999 – 1 January 2013
20,000-29,999 – 1 February 2013
10,000-19,999 – 1 March 2013
6,000-9,999 – 1 April 2013
4,100-5,999 – 1 May 2013
4,000-4,099 – 1 June 2013
3,000-3,999 – 1 July 2013
2,000-2,999 – 1 August 2013
1,250-1,999 – 1 September 2013
800-1,249 – 1 October 2013
500-799 – 1 November 2013
350-499 1 January 2014
250-349 1 February 2014

Staging dates for employers with fewer than 250 persons in their PAYE scheme:

50 to 249 PAYE workers – from 1 April 2014 to 1 April 2015
30 to 49 – from 1 August 2015 to 1 October 2015
Fewer than 30 – from 1 January 2016 to 1 April 2017

Employers without PAYE schemes:

New employers who set up from April 2012 to March 2013 – from 1 May 2017
New employers who set up from April 2013 to March 2014 – from 1 July 2017
New employers who set up from April 2014 to March 2015 – from 1 August 2017
New employers who set up from April 2015 to December 2015 – from 1 October 2017
New employers who set up from January 2016 to September 2016 – from 1 November 2017
New employers who set up from October 2016 to June 2017 – from 1 January 2018
New employers who set up from July 2017 to September 2017 – from 1 February 2018
New employers who set up from October 2017 onwards *** – Immediate duty

Employers are allowed to bring their staging date forward, but it must be from a list of available dates here from The Pensions Regulator.

Employers can choose to delay working out who to put into a pension scheme for up to three months for some or all of your staff. This is known as postponement. You can read more details here.

The Pensions Regulator have a range of enforcement options for Employers who don’t comply with pensions auto-enrolment, which includes fines and Civil Court Action.

Any questions about Retirement and Pensions please ask us using the form below!


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